d. If the employees are not covered, what is the maximum amount Ken can contribute for himself?Only 25% of employee earningsLesser of $61,000 or 25% of employee earningsGreater of $61,000 or 25% of employee earningsOnly 25% of employee earningsOnly $61,000e. If Ken is required to contribute for his employees and chooses to contribute the maximum amount, what is the maximum amountKen can contribute for himself? (Hint: Calculate the employee amounts first.) Ignore any changes in Ken's self-employment tax.Maximum contribution$0 Ken is a self-employed architect in a small firm with four employees: himself, his office assistant, and two drafters, all of whom haveworked for Ken full-time for the last four years. The office assistant earns $33,600 per year and each drafter earns $43,600. Ken's netearnings from self-employment (after deducting all expenses and one-half of self-employment taxes) are $353,600. Ken is consideringwhether to establish a SEP plan and has a few questions. Assume that all the employees are at least 21 years old.Required:a. Is he eligible to establish a SEP plan?Yesb. Is he required to cover his employees under the plan?Yes

SEP plan: An employer or self-employed person can open an individual retirement account (IRA) known…

d. If the employees are not covered, what is the maximum amount Ken can contribute for himself? Only 25% of employee earnings ......... Lesser of $61,000 or 25% of employee earnings Greater of $61,000 or 25% of employee earnings Only 25% of employee earnings Only $61,000 e. If Ken is required to contribute for his employees and chooses to contribute the maximum amount, what is the maximum amount Ken can contribute for himself? (Hint: Calculate the employee amounts first.) Ignore any changes in Ken's self-employment tax.

d. If the employees are not covered, what is the maximum amount Ken can contribute for himself? Only 25% of employee earnings ......... Lesser of $61,000 or 25% of employee earnings Greater of $61,000 or 25% of employee earnings Only 25% of employee earnings Only $61,000 e. If Ken is required to contribute for his employees and chooses to contribute the maximum amount, what is the maximum amount Ken can contribute for himself? (Hint: Calculate the employee amounts first.) Ignore any changes in Ken's self-employment tax.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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keAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress3false еВook Problem 9-35 (LO. 6) Amber's employer, Lavender, Inc., has a 5 401(k) plan that permits salary deferral elections by its employees. Amber's salary is $99,000, and her marginal tax rate is 24% and she is 42 years old. a. What is the maximum amount Amber can elect for salary deferral treatment for 2020? b. If Amber elects salary deferral treatment for the above amount, how much can she save in taxes? Her tax liability for 2020 would be reduced by $ C. What is the recommended amount that Amber should elect as salary deferral treatment for 2020? Previous Next Check My Work
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